The Union Budget 2024-25 introduced several modifications to the capital gains tax structure:
- Tax Rates:
- Long-Term Capital Gains (LTCG): All long-term capital gains, both financial and non-financial, will now be taxed at a uniform rate of 12.5%.
- Short-Term Capital Gains (STCG): Short-term capital gains on specific assets will be taxed at 20%.
- Exemptions under Section 54 and 54F:
- The exemption limit for investing in residential property has been capped at ₹10 crore. Previously, there was no such cap, allowing high net worth individuals to claim significant exemptions by investing in expensive properties.
- For example, if an individual sells a property and has capital gains of ₹18 crore and invests the entire amount in a new residential property, the exemption will now be limited to ₹10 crore. Any gain above this amount will be taxable (Thackray Williams) (TaxGuru).
- Annual Allowance:
- The CGT annual allowance remains unchanged, set to reduce from ₹6,000 to ₹3,000 per individual from April 2024.
These changes aim to streamline the capital gains tax system and limit excessive tax exemptions claimed through high-value property investments, ensuring a more equitable tax structure (Thackray Williams) (TaxGuru).
